US needs E15 to attract investors to cellulosic ethanol - group

HOUSTON (ICIS news)--The US must raise its ethanol blend level in gasoline to 15% (E15) to draw more investors to second-generation cellulosic ethanol, an industry group said on Tuesday.

The US now limits ethanol blending in gasoline at 10%, but the industry argues the restriction - also known as the blend wall - needs to be relaxed to secure a market for the biofuel in the coming years.

“You cannot attract investment [to cellulosic] if you cannot guarantee there will be a market for it,” said Chris Thorne, a spokesman with ethanol group Growth Energy.

The US plans to begin blending cellulosic ethanol in gasoline in 2010, mixing 100m gal of the product in its gasoline supply.

That level will jump to 250m gal in 2011 and 16bn gal/year by 2022.

Unlike regular ethanol, which in the US is made mostly from corn, cellulosic ethanol is produced from non-edible crops, such as switchgrass and woodchips.

According to Growth Energy, the US is unlikely to meet the 100m gal cellulosic goal next year unless it raises the blend wall to 15%.